ISET

ISET Economist Blog

A blog about economics in the South Caucasus.
Oct
11

The Warning Bells are Ringing: A Difficult Summer Season for the Georgian Electricity Market

Historically, the main concern in monitoring the Georgian electricity market derives from the negative generation-consumption gap arising in the winter season. However, persistent electricity deficits over ten months between August 2018 and August 2019 suggest that the number of months characterized by a negative generation-consumption gap might be on the rise. Looking at Figure 1 below, generation can only clearly be seen to exceed consumption twice during the past 12 months, in May and June. This year has been the first time that Georgia has faced an e...
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Jun
28

An Assessment of the Electricity Market in Light of the “Gavrilov Effect”

The latest impact of Gavrilov’s visit to Georgia have fueled societal concerns about the economic consequences of deterioration in Russo-Georgian relations. For instance, due to the Russian government’s decision to cancel flights to Georgia, residents are beginning to worry about potentially adverse economic impacts to the tourism sector. ISET-PI has already discussed the expected impact of such a change, highlighting how these concerns might be unwarranted, as tourism account for 7.6% of the GDP, with Russian tourism contributing only 1.8% to the econom...
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Jun
24

How Can You Be Sure? On the Agricultural Insurance in Georgia

  BACKGROUND Agricultural production is associated with a variety of risks, including market, institutional, and production risks. An important production factor in agriculture is the weather. Its uncontrollable nature makes weather risk the prevailing risk to agricultural production. Farmers have various informal and formal means of transferring and mitigating these risks. Informal means include savings, diversification, off-farm activities, etc. The most common formal means of risk mitigation is insurance. Insurance is a contract that transfers th...
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May
31

A Persistent Negative Generation-Consumption Gap, a Puzzle to Be Explored

Looking at consumption and generation trends, it is evident that since August 2018 consumption typically exceeded generation. The negative generation-consumption gap also remained throughout April, amounting to 45 mln. kWh, with a total power generation of 966 mln. kWh and a consumption of 1,012 mln. kWh. Yet why has the generation-consumption gap remained negative since August 2018? Should we also expect the negative gap to persist over the following months? Figure 1. Generation-Consumption Gap A negative generation-consumption gap in April is a relati...
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May
27

Short-Term Swings of the Georgian Lari: A Guessing Game with High Stakes

In the last two weeks lari depreciated, once again, against the US dollar. Georgian currency lost about eight tetri against its American counterpart, causing quite a stir in the media, among political groups and economic experts. While government authorities claimed that the recent developments are short-term fluctuations driven by negative expectations, Turkish lira depreciation, dollar’s global strengthening, and are therefore not connected to the fundamentals of the Georgian economy, the members of opposition were quick to blame incompetent fiscal and...
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Apr
26

Granted Survival!

Various business support programs have been implemented in many countries across the world. Grants, interest-rate subsidies, and equity participation are among some of the most adopted tools for promoting firms’ performances (Dupont and Martin, 2006). Such assistance programs also have their own objectives. For example, low-interest rate loans and cash transfers to new and small firms are designed to overcome the financial constraints many firms face (Hubbard, 1998). Moreover, these programs may aim to help firms adopt new technologies (Bronzini and Pise...
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